Varonis Q4 Earnings Surpass Estimates, Revenues Increase Y/Y

Varonis Systems VRNS came out with fourth-quarter 2025 earnings of 8 cents per share, beating the Zacks Consensus Estimate by 166.7%. This compares with earnings of 18 cents per share a year ago.

VRNS posted revenues of $173.37 million for the quarter ended December 2025, beating the Zacks Consensus Estimate by 2.87%. This compares with year-ago revenues of $158.5 million.

Varonis beat the Zacks Consensus Estimates in each of the last four quarters, with an average surprise of 123.8%.

Varonis’ strong performance in the fourth quarter of 2025 was attributed to SaaS momentum, rising demand for automated data security, expanding AI adoption, higher SaaS retention, and accelerating cloud workloads.

Varonis’ Q4 2025 Details

Coming to Varonis’ business segments, revenues from SaaS (82.1% of total revenues) increased 97.1% year over year to $142.3 million. Term license subscriptions (12.1% of total revenues) decreased 68.6% year over year to $21.0 million. Maintenance and services (5.8% of total revenues) decreased 48.3% year over year to $10.1 million due to customers converting to the SaaS platform.

Varonis’ total annual recurring revenues (ARR) came in at $745.4 million, indicating a year-over-year rise of 16.1% in the fourth quarter of 2025. SaaS ARR of $638.5 million accounted for 86% of total ARR, rising 32% year over year, excluding conversions.

Varonis’ gross margin declined 470 basis points to 78.9% in the fourth quarter of 2025, reflecting the ongoing transition toward a SaaS-centric revenue model. The company reported a non-GAAP operating income of $4.6 million compared with $15.3 million in the year-ago quarter. The non-GAAP operating margin for the quarter was 2.7%, down from 9.7% in the prior-year period.

VRNS’ Balance Sheet & Cash Flow

As of Dec. 31, 2025, Varonis had $921 million in cash, cash equivalents, marketable securities and short-term deposits, down from $1.1 billion as of Sept. 30, 2025.

The company generated $147.4 million in operating cash flow and reported free cash flow of $131.9 million in 2025.

Varonis Initiates Q1 and 2026 Guidance

For the first quarter of 2026, revenues are expected to be in the range of $164 million to $166 million, suggesting year-over-year growth of 20-22%. The Zacks Consensus Estimate is pegged at $163.8 million.

Varonis expects SaaS annual recurring revenue (ARR) to grow 27-28% year over year, excluding conversions. Varonis expects a non-GAAP operating loss between $10 million and $11 million.

The company projects a non-GAAP net loss per basic and diluted share in the range of 5 cents to 6 cents, based on 118.0 million basic and diluted shares outstanding. The Zacks Consensus Estimate is pegged at an earnings of 4 cents per share.

For full-year 2026, total revenues are expected to be between $722 million and $730 million, suggesting year-over-year growth of 16-17%. The Zacks Consensus Estimate is pegged at $717.3 million.

Varonis expects non-GAAP operating income to be in the range of breakeven to $4 million. The company anticipates free cash flow in the range of $100 million to $105 million.

The company projects non-GAAP net income per diluted share in the range of 6 cents to 10 cents, based on 134.2 million diluted shares outstanding. The Zacks Consensus Estimate is pegged at 38 cents per share.

Varonis expects SaaS ARR to be between $805 million and $840 million, implying year-over-year growth of 26-32%. SaaS ARR growth is projected to be 18-20% year over year, excluding conversions.

VRNS’ Zacks Rank & Stocks to Consider

Currently, VRNS carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector are Amkor Technology AMKR, Arista Networks ADI and Advanced Energy AEIS. While Amkor Technology sports a Zacks Rank #1 (Strong Buy), Arista Networks and Advanced Energy carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1  Rank stocks here.

Amkor Technology shares have surged 103.2% in the trailing six-month period. Amkor Technology is set to report fourth-quarter 2025 results on Feb. 9.

Shares of Arista Networks have gained 27.6% in the trailing six-month period. Arista Networks is set to report fourth-quarter 2025 results on Feb. 12

Shares of Advanced Energy have gained 85.4% in the trailing six-month period. Advanced Energy is slated to report third-quarter 2025 results on Feb. 10.

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This article originally published on Zacks Investment Research (zacks.com).

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